PARIS — Given their dependence on travel flows, luxury goods could see a “short, sharp negative impact” from a widening Ebola crisis.
So says a research note from Barclays, which argues that European players dependent on wholesale and hard luxury would be the most vulnerable, including Swatch, Richemont, Tod’s and Hugo Boss.
During the SARS outbreak, a period also marred by the Iraq war and general weakness in Europe, stocks in Barclays’ luxury index declined 21 percent between November 2002 and March 2003, rebounding 47 percent by August 2003, also supported by the end of the Iraq conflict.
Barclays noted that leather goods makers — especially retail-driven ones like Louis Vuitton, which has no wholesale business – showed more resilience than watch and jewelry players.
The report follows an analysis by Marvin Barth, Barclays’ foreign exchange specialist, that concluded that, “for Ebola to be a serious market risk, it needs to more acutely threaten supply or demand in larger or more economically integrated economies.”
Any global outbreak could impact travel and tourism, which account for as much as 50 percent of luxury goods purchases today thanks to a higher contribution from Chinese consumers, according to Barclays.